'Creative accounting' involves accountants in making
accounting policy choices or manipulating transactions in
such a way as to give the impression in the accounts
that they prefer. While regarded as unethical by most
observers, a defence of creative accounting can be based
on the ability of the users of accounts to identify bias
in accounting policy choices and make appropriate adjustments.
In this paper we take the example of the Barcelona Football
Club where the club management made three key accounting
policy choices that presented a favourable position, and a
supporters' club presented an alternative report choosing
three alternative accounting policies that presented an
unfavourable position. We presented each of these financial
reports to one of two groups of Spanish bank loan offices,
with supporting notes making the impact of the accounting
policy choices clear. We found that the more favourable set
of accounts was significantly more likely to attract a positive
response to a loan request.
This result undermines the defence for creative accounting,
based on the ability of users to identify manipulation.

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